The Top 10 Energy Stories Of 2016

A lot happened in the energy sector in 2016, with two major stories leading the way. Both the surprising election of Donald Trump to the presidency, and OPEC’s November announcement to curtail production vied for the top spot on my list, as they will both likely impact the energy markets for years to come.

But in 2016 there were also huge wildfires that curtailed oil sands production in Canada, a major new pipeline protest that erupted in North Dakota, high profile bankruptcies in the coal sector, and several important stories on hydraulic fracturing in the U.S.

Here is a list of what I believe were the year’s major energy stories. First the Top 5:

1. Donald Trump wins the presidency

Had Hillary Clinton won, it wouldn’t have been the top story, because it would have meant a continuation of President Obama’s policies. But given the picks so far that will make up Trump’s key energy team, it seems overwhelmingly likely that his term will mark a huge shift from the policies of the past eight years. Unlike the next story, this one will impact every segment of the U.S. energy sector.

2. OPEC agrees to production cuts

Some would not rank this story this high, but OPEC’s decision in November to reduce output is the first such decision in eight years. Saudi Arabia will bear ~40% of the cuts, and within OPEC Saudi usually gets what Saudi wants. This takes a lot of downside risk out of the oil market, and should end talk of oil falling back to the $20s or lower. Yes, some OPEC members are likely to cheat on the quotas, and shale oil producers are likely to rush in and fill the gap from these cuts. But this is a strategy shift that will last for years.

3. The Dakota Access Pipeline saga

The $3.8 billion Dakota Access Pipeline (DAPL) that is meant to carry crude from North Dakota to Illinois became the latest high-profile pipeline project to be targeted by protesters. The Standing Rock Sioux and their environmentalist allies protested plans to cross the Missouri River just north of the reservation, claiming the pipeline would harm historical and sacred sites and endanger the tribe’s drinking water source. Protesters from across the country flocked to the area, and there were a number of clashes with authorities. Although the courts sided with DAPL, the Obama Administration intervened on behalf of the protesters to at least temporarily halt the project. Expect this controversy to heat up again in 2017, as Donald Trump has promised to swiftly approve stalled pipeline projects.

4. Coal bankruptcies

The coal industry has suffered tremendously as utilities have shifted toward natural gas and renewables, and 2016 saw two major coal producers declare bankruptcy. Peabody Energy, the world’s largest publicly traded coal company, and Arch Coal Inc both filed for Chapter 11bankruptcy protection.

5. Oil and natural gas prices bottomed

Oil prices fell below $30/bbl for the first time in 12 years, while natural gas prices dipped to the lowest levels in 18 years. But prices for both commodities rose substantially off of those first quarter lows by year-end.

It was difficult to narrow the rest of the list down to 10 (see my Top 30 Energy Stories at Forbes for a fuller list). But here are five more that defined the energy sector in 2016:

Beyond that Top 10, there were several important news stories that involved hydraulic fracturing, and many moves by the Obama Administration to cement his environmental legacy. And some court challenges to that legacy. A sampling of these stories included:

The Supreme Court temporarily blocked the Obama Administration’s plan to limit greenhouse gas emissions from power plants while the rule is challenged in court

Despite testimony in court that there was no evidence of fracking contaminating the plaintiffs’ water wells, a jury awarded $4.2 million to two Pennsylvania families on the grounds that drilling by Cabot Oil and Gas had created a private nuisance

Results of a three-year investigation by the University of Cincinnati revealed zero impact from hydraulic fracturing on local water supplies

The Environmental Protection Agency (EPA) issued a final rule to sharply cut methane emissions from oil and gas drilling

Following a major earthquake in Oklahoma, state regulators ordered oil and gas companies to shut down all (hydraulic fracturing) wastewater disposal wells near the quake’s epicenter

A two-year study by the Wyoming Department of Environmental Quality concluded that bacteria, not hydraulic fracturing, were the likely cause of well water contamination in Pavillion, Wyoming — contradicting claims made in the anti-fracking movie “Gasland”